Macao, the world’s largest gambling enclave, has told casino operators to shut down for at least two weeks to prevent the spread of the coronavirus.
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Shares of U.S. casino operators in the semi-autonomous region, including MGM Resorts International, Wynn Resorts and Las Vegas Sands, fell on the news before clawing back their losses.
|MGM||MGM RESORTS INTERNATIONAL||15.90||-0.09||-0.56%|
|WYNN||WYNN RESORTS LIMITED||78.25||-4.90||-5.89%|
|LVS||LAS VEGAS SANDS CORP||46.90||-1.67||-3.44%|
"It's a very difficult decision, but one we have to make for the sake of the health of Macao citizens," Ho Iat-seng, the region's chief executive, said at a news conference covered by The Wall Street Journal.
A Wynn Resorts spokesperson told FOX Business that the company supports the government's decision to "prioritize public safety and temporarily suspend the operations of all of Macau’s gaming areas," which it says is "in the best long-term interests of everyone concerned."
Las Vegas Sands told FOX Business that the "health and safety" of its team members and guests was its "number one priority."
MGM Resorts International did not immediately respond to FOX Business' request for comment.
The only area in China that allows gambling, Macao draws about 76% of its tax revenue from the industry.
Its gross gaming revenue for 2019 was 292.5 billion patacas ($36.6 billion), according to the Gaming Inspection & Coordination Bureau. By comparison, Clark County, Nevada, home of Las Vegas, raked in $10.36 billion in 2019, Nevada Gaming Control Board data showed.
The coronavirus, which has sickened more than 20,600 and killed 425, has brought parts of China to a standstill as more than 40 million people have been put under lockdown.
The rapid spread of the virus has prompted Macao to close its borders to Chinese tourists, choking off the lifeblood of its economy.
A record 39.4 million tourists flocked to the gaming enclave in 2019, with the majority coming from mainland China, according to Casino.org, which cited Macao Public Security Police Force data.
That helped drag gaming revenue down to 22.1 billion patacas in January, an 11.3% decline from the previous year, according to the Gaming Inspection and Coordination Bureau. The number of visitors during the Jan. 24-30 Lunar New Year holiday dropped 78 percent.
With the ban on both tour groups and individual visits that Beijing approved near the end of January, "we expect gross gaming revenue to be significantly down year-over-year," UBS analyst Angus Chan wrote before the casinos were shuttered.
"Any forecast would be subject to a high margin of error, but we wouldn't be surprised if gross gaming revenue dropped by more than 50% in February," Chan said.
Shares of MGM have tumbled 9.6 percent amid the coronavirus outbreak, while Wynn has dropped 15.2 percent and Las Vegas Sands has fallen 10.1 percent.